M/s Avit Distributors Pvt. Ltd., Kolkata V. Recovery Officer-4/Ward-10(1), Kolkata

ITA 824/KOL/2019

AI Insights

The case involves M/s. Avit Distributors Pvt. Ltd., which appealed against the order of the Learned Commissioner of Income Tax (Appeals)-15, Kolkata, confirming the addition of Rs. 3,50,00,000 as unexplained share capital for the Assessment Year 2012-13. The assessee did not appear for hearings nor provide explanations for the non-appearance, leading to an ex-parte order by the Assessing Officer under Section 144 of the Act. The Tribunal noted the absence of any representation or evidence from the assessee during the appellate proceedings and decided the case based on the records and submissions of the Departmental Representative.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132567 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 17-04-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: Unexplained cash credit
• Section: 68; 144; 142(1); 250; 143(2)

Judgement Text

| आयकर अपीलीय अिधकरण ᭠यायपीठ, कोलकाता | IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJPAL YADAV, HON’BLE VICE PRESIDENT & DR. MANISH BORAD, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 824/Kol/2019 Assessment Year: 2012-13 M/s. Avit Distributors Pvt. Ltd. Shri N.K. Goyal 16, N.S. Road 2 nd Floor Kolkata - 700001 [PAN : AAKCA1496P] Vs Tax Recovery Officer-4/Ward 10(1) अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) Assessee by : None Revenue by : Smt. Ranu Biswas, Addl. CIT, Sr. D/R सुनवाई कᳱ तारीख/Date of Hearing : 28/02/2023 घोषणा कᳱ तारीख /Date of Pronouncement: 17/05/2023 आदेश/O R D E R PER DR. MANISH BORAD, ACCOUNTANT MEMBER : This is the appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-15, Kolkata (hereinafter referred to as the ld. CIT(A)”], passed u/s 250 of the Income-tax Act, 1961 (hereinafter the ‘Act’), dated 27/12/2018 for the Assessment Year 2012-13. 2. At the outset, the Registry has pointed out that there is a delay of ten days in filing of the appeal by the assessee. The assessee has filed a petition for condonation of delay. After perusing the same, we are convinced that the assessee was prevented by sufficient cause from filing this appeal in time. Hence, we condone the delay and admit the appeal. 3. When the case was called for hearing, none appeared on behalf of the assessee. The assessee failed to appear on the last date of hearing i.e., on 7 th November, 2022 and today i.e., 28/02/2023. Order passed by the Assessing I.T.A. No. 824/Kol/2019 Assessment Year: 2012-13 M/s. Avit Distributors Pvt. Ltd. 2 Officer is also an ex-parte order u/s 144 of the Act and before the ld. CIT(A) also, there is no proper representation on behalf of the assessee. It thus, prima facie indicates that assessee is not interested to prosecute its appeal. We, therefore, decide to adjudicate the appeal on the basis of available records and the submissions of the ld. D/R. 4. We have heard the ld. D/R and perused the record placed before us. The assessee has raised four grounds of appeal of which, Ground Nos. 1 & 4 are general in nature and need no adjudication. 5. The effective grounds are Ground Nos. 2 & 3, through which, action of the ld. CIT(A) in confirming the addition u/s 68 of the Act of unexplained share capital of Rs.3,50,00,000/- is challenged and further stated that the ld. CIT(A) has erred in not taking cognizance of the submissions of the assessee given on 15/03/2018. We notice that the assessee is a Private Limited Company and income of Rs. 1,030/- was declared in the e-return filed on 27/09/2012. Case was selected for scrutiny through CASS followed by notices u/s 143(2) & 142(1) of the Act. In response to the notice, no one appeared nor any explanation for non- appearance was furnished. On verification of the Income-tax database and the return filed by the assessee, ld. Assessing Officer noticed that during the year under consideration, assessee has received share premium amounting to Rs.3,50,00,000/-. Thus, ld. Assessing Officer wanted to examine the nature and source of the said sum received by the assessee company. Further, since there was no representation, ld. Assessing Officer proceeded to frame a best judgment assessment and invoked the provision of Section 68 of the Act and made an addition for unexplained cash credit in the form of share capital of Rs.3.50 Crores and assessed the income at Rs.3,50,01,030/-. I.T.A. No. 824/Kol/2019 Assessment Year: 2012-13 M/s. Avit Distributors Pvt. Ltd. 3 6. We further notice that the assessee challenged this addition before the ld. CIT(A). In the statement of fact, filed along with Form No. 35, assessee has accepted that it has received the alleged sum but challenged the addition merely on the ground that company is yet to start its operations for all practical purpose and, therefore, the facts need to be verified after conducting proper and just enquiry. However, when the case was called for hearing on 28/11/2018, 15/03/2018 and 23/03/2018, assessee failed to avail these opportunities and did not appear nor file any written submissions before the ld. CIT(A), who after placing reliance on various judicial pronouncements confirmed the action of the ld. Assessing Officer. 7. Before us, there is no representation by the assessee, no details have been filed in the form of any paper book. Even statement of facts has not been furnished in the details. It is an admitted fact that the assessee has received Rs.3.50 Crores during the year as observed by the ld. Assessing Officer in the assessment order. Though, in the grounds, the assessee has stated that only Rs.1,00,000/- was received but the said amount is itself contradictory looking to the facts narrated by the assessee while filing Form No. 35 before the ld. CIT(A). 8. Now, once it is confirmed that assesse has received Rs.3.50 Crores during the year, then, ld. AO was within his jurisdiction to examine the said receipts in line with the provisions of Section 68 of the Act, which reads as follows:- “68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year: [Provided that] where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited I.T.A. No. 824/Kol/2019 Assessment Year: 2012-13 M/s. Avit Distributors Pvt. Ltd. 4 consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: [Provided further] that nothing contained in the first proviso [or second proviso] shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.]” 9. From perusal of the above provision, we observe that if there is a credit found in the books of account of the assessee, ld. Assessing Officer can ask the assessee to explain the same and as a first step assessee has to place documentary evidence to the satisfaction of the Assessing Officer to prove the nature and source of such credit. Since assessee has miserably failed to discharged primary onus casted upon it under the provisions of Section 68 of the Act to explain the nature and source of the alleged sum thus, failing to prove the identity and creditworthiness of the share applicants and genuineness of the transactions which itself is in serious doubts considering the fact that the assessee company is newly incorporated and as it is stated to have not started its business in practical terms. Therefore, it is quite surprising that how can a newly formed company with no regular business activity can attract such huge share premium of Rs. 3.50 Crores. Since all these questions remain unanswered by the assessee, we are inclined to hold that since the assessee has failed to explain the nature and source of credit of Rs.3.50 Crore, received/entered in the books during the year, no interference is called for in the finding of the ld. CIT(A) confirming I.T.A. No. 824/Kol/2019 Assessment Year: 2012-13 M/s. Avit Distributors Pvt. Ltd. 5 the addition u/s 68 of the Act. Thus, Ground No. 2 raised by the assessee is dismissed. 10. Vide Ground No. 3, the assessee has submitted that the ld CIT(A) has failed to consider the submissions dt. 15/03/2018. Since no evidence is placed before us that the assessee has filed any written submission before the ld. CIT(A) on 15/03/2018 and also since the ld. CIT(A) himself stated in the order that on the date of hearing on 15/03/2018, assessee did not appear, we, therefore, fail to find any merit in this ground. Thus, Ground No. 3 raised by the assessee is dismissed. 11. In the result, appeal of the assessee is dismissed. Order pronounced in the Court on 17 th May, 2023 at Kolkata. Sd/- Sd/- (RAJPAL YADAV) (DR. MANISH BORAD) VICE PRESIDENT ACCOUNTANT MEMBER Kolkata, Dated 17/05/2023 *SC SrPs आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent 3. संबंिधत आयकर आयुᲦ / Concerned Pr. CIT 4. आयकर आयुᲦ)अपील (/ The CIT(A)- 5. िवभागीय ᮧितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाडᭅ फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Kolkata